Neutral Procter and Gamble Hygiene and Health Care; target of Rs 14000: Motilal Oswal

Motilal Oswal's research report on Procter and Gamble Hygiene and Health Care

P&G Hygiene and Healthcare’s (PGHH) 2QFY26 revenue growth was broadly in line with our expectations, but profitability was a miss. Similar margin anomalies have been observed in past quarters. Revenue grew 1% YoY to INR11.5b (in line) in 2QFY26, reflecting flat growth in the base quarter. Overall revenue growth has remained weak over the past few quarters. Gross margin contracted 160bp YoY and 230bp QoQ to 61.3% (est. 63.5%), reflecting the usual volatility between quarters. Employee costs declined 20% YoY, while A&P grew 2% YoY and other expenses rose 3% YoY. EBITDA declined 2% YoY to INR2.8b (below), while EBITDA margin contracted 80bp YoY and 370bp QoQ to 24.8%. The high COGS was partially offset by lower employee costs, helping limit the contraction in EBITDA margin.

Outlook

The stock trades at rich valuations of 49x/45x FY26E/FY27E P/E. Further, we do not see any medium-term trigger. Reiterate Neutral with a TP of INR14,000, based on 45x Sep’27E EPS.